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Saturday, February 4, 2012

Why We're Broke, Part Umpteen

Despite being one of the largest, most profitable companies on the planet, ExxonMobil continues to pay taxes at a lower rate than the average American. ThinkProgress reports that the oil giant, which just released its Q4 earnings from last year, made $41 billion in 2011—that's up 35% from 2010.

But remember, Exxon only pays an average tax rate of 17.6%, which is less than the average American, who pays 20%. (TP does point out, humorously, that Exxon pays a higher rate than Mitt Romney, who gets away with a crazy low 13.9% rate on his capital gains) And since corporations are treated as persons in the eyes of a law, that just doesn't seem fair. The top marginal tax rate for individuals, after all, is 35%.

So how does Exxon get away with paying such a relatively low rate? Along with other oil companies, it enjoys the rather generous tax breaks and subsidies the federal government—and the American taxpayer—sends its way.

WASHINGTON—U.S. companies are booking higher profits than ever. But the number crunchers in Washington are puzzling over a phenomenon that has just come into view: Corporate tax receipts as a share of profits are at their lowest level in at least 40 years.

Total corporate federal taxes paid fell to 12.1% of profits earned from activities within the U.S. in fiscal 2011, which ended Sept. 30, according to the Congressional Budget Office. That's the lowest level since at least 1972. And well below the 25.6% companies paid on average from 1987 to 2008.